Email this article to a friend

Ken Livingstone, the mayor of London, has questioned whether the Investment Exchanges and Clearing Houses Bill, guided through the House of Commons last week by the UK's Economic Secretary to the Treasury Ed Balls, can prevent the spread of US-style regulations into London's financial markets.

Livingstone said in a letter to the Daily Telegraph published today: “The Government wants to deal with the important matter of regulation with the IECHB. But I doubt that the US Securities and Exchange Commission would be overruled by UK legislation in a key matter affecting Nasdaq and the London Stock Exchange.”

The bill is designed to ensure that London firms are not subjected to US rules, including Sarbanes-Oxley accounting standards, in the event of Nasdaq buying the LSE.

Livingstone said he “would still have concerns about the LSE being taken over by its smaller and competitively weaker rival", even if safeguards can be introduced to ensure US rules do not come with Nasdaq.

He reiterated his case that a Nasdaq-LSE deal would affect international competition between exchanges and London’s financial markets.

Livingstone first spoke out against Nasdaq’s £2.9bn (€4.3bn) bid last week when he called on the Office of Fair Trading, the UK competition watchdog, to probe the deal.

He said: “The New York Stock Exchange, the LSE and Nasdaq are the three premier stock exchanges in the world. The takeover of the LSE by Nasdaq would reduce this number to two causing damage both to the competitiveness of international markets and to the prosperity of London.”

Livingstone also accused Nasdaq of “exploiting a legal loophole whereby a London exchange would be prevented from taking over a US exchange but where the LSE can be taken over by a US one".

The Mayor’s concerns do not extend to the proposed merger between the New York Stock Exchange and Euronext’s London-based Liffe business, however.

“I believe there is no significant competition reduction in the proposed merger of a broadly based equities based exchange with a derivatives one. It would allow London to still play a major role in derivatives,” he said.